CONCEPT BOOK: PRINCIPALS OF MANAGEMENT

An Individual Assignment

By

B.L.R.Adithya 2022DFIN01
Diploma in Finance (2023)

DFIN 2303 Management and Organization

Facilitators: Dr. Tissa Ravinda Perera

Department of Finance
Faculty of Management and Finance
UNIVERSITY OF COLOMBO

July 29, 2023

1
Executive Summary

Management is the process of planning, organizing, leading, and controlling resources to achieve
specific goals. It involves coordinating people and resources to achieve organizational objectives.
Management is an ongoing process that works toward achieving organizational goals. It may consist
of multiple organizational layers, offices, people, positions, and so on .

Organization is the process of arranging people and resources to accomplish specific goals . It
involves creating a structure for the organization that will help it achieve its goals. This structure
includes the division of labor, the allocation of resources, and the establishment of policies and
procedures .

The concept of management and organization is important in the business world because it helps
businesses achieve their goals more efficiently and effectively.

In this project, I aimed to improve the efficiency of our organization’s supply chain management
system. I began by conducting an analysis of our current system and identifying areas where we
could make improvements. Based on this analysis, I developed a new system that would streamline
the supply chain process and reduce costs. I then worked on implementing the new system and
training on how to use it effectively. After several months of testing and refinement,I launched the
new system. The results have been impressive, with a significant reduction in costs and an increase
in efficiency across the entire supply chain.

2
Content

01. Effective and Efficiency

02. Traditional organizations and contemporary organizations

03. Virtual organizations and boundary less organizations

04. Mission,vision,goals and objectives

05. Bureaucracy

06. Management by objectives

07. Management by social process

08. Business environment

09. Skills and roles of manager

10. Organization

11. Time and motion study

12. Subordination of individuals to the common goals

13. Hawthorne study

14. The systems approach and the contingency approach

15. The Delphi method

16. Types of decisions

17. Bounded rationality

18. Political forces in decision making

19. Chain of command

20. Mechanistic and organic organizations

21. References - 24

22. Annexures - 25

3
Effectiveness and efficiency

Efficiency and effectiveness are two concepts that are often used interchangeably but have different
meanings. Efficiency is about doing things in the right way, with the least amount of waste or effort.
Effectiveness is about doing the right things, achieving the desired results or outcomes. In other
words, efficiency is concerned with how well resources are used to achieve a goal, while
effectiveness is concerned with whether the goal was achieved in the first place.
Effectiveness in management process refers to the degree to which managers are successful in
achieving their goals and objectives. Here are some examples of effectiveness in management
process:

 A farm that is managed to use less water per acre without sacrificing yield.
 An e commerce company that is managed to have the lowest shipping costs and the fastest
order turnaround time in the industry.
 A company that is managed to have the highest customer satisfaction rate.

Efficiency in management process refers to the strength of internal processes. For example, an
efficient inventory management process will allow a company to quickly unpack, allocate and use
raw materials to produce products that fulfill orders, whereas inefficiencies create bottlenecks and
slow down operations.

Here are some examples of management efficiency:

 Allocation Efficiency: The deployment of resources to create value.

 Process Efficiency: The amount of time, labor and expenses consumed by a process.
 Capital Efficiency: The output a management team creates relative to the capital they direct and
expenses they expend.

Peter Drucker is credited with introducing the concepts of effectiveness and efficiency. In discussing
the distinction between the two concepts, he once said, “Efficiency is doing things right;
effectiveness is doing the right things.”

4
Traditional organizations and Contemporary organizations

Traditional organizations are hierarchical and bureaucratic in nature. They are characterized by a
top-down management style where decisions are made at the top and passed down through the
ranks. Examples of traditional organizational structures include functional organizational structure
and divisional organizational structure. In functional organizational structure, the organization
divides its employees into groups based on their roles or specialties. In divisional organizational
structure, larger organizations benefit from this type of structure, which divides employees into
teams based on specific products, projects or locations. I believe that the concept of traditional
organizations in management has been around for a long time and has been developed by many
different people over the years.

However, one of the most influential thinkers in this area was Max Weber, who is often credited
with developing the concept of bureaucracy. His ideas about the importance of hierarchy, rules, and
procedures have had a significant impact on the way that organizations are structured and managed
today.

Contemporary management is a modern approach to overseeing a business and involves activities

like planning, decision-making and monitoring. This practice attempts to establish goals that align
with the interests of stakeholders ranging from traditional investors to employees and customers.
Contemporary management teams rely on their evaluation of data and trends to make informed
decisions about the direction of the company. They also tend to be more decentralized than
traditional management models, encouraging teamwork between departments and soliciting input
from employees who may not otherwise have much authority.

Contemporary management theory began with the work of Peter Drucker . He proposed the
concept of Management by Objective. His work was a departure from the classical and behavioral or
human relations approaches of the past .

Here are some examples of contemporary organization in the management process:

 A functional structure
 Matrix structures

5
Virtual organizations and boundary less organizations

A virtual organization is a network of independent companies that work together to perform

business functions . Here are some examples of virtual organizations:

 The Linux operating system is an example of a virtual organization. It is developed by a group of

programmers who work together over the internet .
 The Virtual Computing Environment Company (VCE) is a joint venture between Cisco and EMC
Corporation that sells data center products .

The terms virtual organization, virtual enterprise or virtual corporation were first utilized in the early
1990s as demonstrated by the work of Jan Hopland, Roger N. Nagel, William H. Davidow and
Malone. A boundary less organization is a type of organization that is not defined by traditional
boundaries such as hierarchy, geography, or function. It is characterized by a flat structure where
employees are empowered to make decisions and work collaboratively across departments and
locations. Examples of boundary less organizations include General Electric, IBM, and Procter &
Gamble.

The concept of a boundary less organization was first formulated by the former chairman of General
Electric Jack Welch. He wanted to break down barriers that existed at the time between different
parts of the company and create an organization that was more flexible and adaptable to change.
The idea behind a boundary less organization is that it is not defined by traditional boundaries such
as hierarchy, geography, or function.

Virtual organizations and boundary less organizations are used in management to create more
flexible business environments and teams that transcend geographic boundaries. Virtual
organizations use computers, software, phones and other technology to work together and converse
in real-time, despite any physical distance.

Boundary less organizations break down the traditions, vocational constraints, and hierarchies of
more traditional company structures. Employees at these types of organizations can expect a flexible
business environment and a team of coworkers that transcend geographic boundaries.

Some of the widely known examples of boundary less organizations are General Electric, Apple,
Boeing, Airbus Industries and Toyota.

6
Mission, Vision, Goals and objectives

Mission and vision statements are important components of the management process. A mission
statement is a brief statement that describes the purpose of an organization and what it does. A
vision statement is a statement that describes what an organization wants to achieve in the future.

Here are some examples of mission and vision statements:

 Microsoft: “Empower every person and every organization on the planet to achieve more.”
 Amazon: “To be Earth’s most customer-centrist company, where customers can find and
discover anything they might want to buy online.”
 Tesla: “To accelerate the world’s transition to sustainable energy.”
 Google: “To organize the world’s information and make it universally accessible and useful.”

Goals and objectives are important components of the management process. Goals are broad
statements that describe what an organization wants to achieve. Objectives are specific and
measurable targets that help an organization achieve its goals.

Here are some examples of goals and objectives:

 Microsoft: Goal - “Empower every person and every organization on the planet to achieve
more.” Objective - “Increase the number of people using Microsoft Teams by 50% in the next
year.”
 Amazon: Goal - “To be Earth’s most customer-centrist company, where customers can find and
discover anything they might want to buy online.” Objective - “Reduce delivery times by 20% in
the next year.”
 Tesla: Goal - “To accelerate the world’s transition to sustainable energy.” Objective - “Increase
the number of charging stations by 50% in the next year.”
 Google: Goal - “To organize the world’s information and make it universally accessible and
useful.” Objective - “Increase the number of Google Workspace users by 25% in the next year.”

7
Bureaucracy

Bureaucracy is a specific form of organization defined by complexity, division of labor, permanence,

professional management, hierarchical coordination and control, strict chain of command, and legal
authority. It is distinguished from informal and collegian organizations. In its ideal form, bureaucracy
is impersonal and rational and based on rules rather than ties of kinship, friendship, or favoritism.
Here are some examples of bureaucratic organizations:

 The Internal Revenue Service (IRS): The IRS is a classic example of bureaucracy. There are many
different regulations that must be followed in order for the IRS to process your tax return2.
 The United States Postal Service (USPS): The USPS is another example of bureaucracy. It has a
complex organizational structure with many different departments and levels of management3.
 The Department of Motor Vehicles (DMV): The DMV is a bureaucratic organization that is
responsible for issuing driver’s licenses and vehicle registrations. It has many different rules and
regulations that must be followed in order to obtain a license or registration.

Bureaucracy has its advantages and disadvantages. Here are some of them:

Advantages: Disadvantages:

It has a clear hierarchy that defines who has It can be inefficient and cost more in time and
authority and how much. financial resources than it will save.

It creates a rigid division for the labor that must It can create a lack of accountability because
be complete. there are so many people involved in the
decision-making process.

It is based on impersonal relationships. It can create a lack of flexibility because it is so

focused on following the rules.

8
Management By Objectives

Management by objectives (MBO) is a management model that focuses on organizational goals by

setting a benchmark. The management and employees work together to fulfill the same mission by
having clear intentions, open communication, and shared goals. The model is based on Peter
Drucker’s book, The Practice of Management which was published in 1954.

Here are some examples of management by objectives you might experience at work:

 Marketing: The marketing department has set three goals for the upcoming year.
 Higher education: An institute of higher learning is setting two new goals for the next academic
year.
 Retail: The retail company is setting one new objective for the upcoming fall season.
 Restaurant: A restaurant has set two new objectives for the next three years.

Management by objectives (MBO) has its advantages and disadvantages. Here are some of them:

Advantages:

 Greater employee involvement: The MBO process focuses on getting employees at all levels
involved with setting goals for the company.
 Planning: To set goals, managers plan for the future and determine the overall objectives for
their business.

Disadvantages:

 Tracking is tricky: The MBO method requires companies to consistently monitor their progress
toward objectives and revise processes and projects that aren’t supporting those objectives.
 Dangers of constant revision: Constant revision can lead to confusion and frustration among
employees.

Some of the most notable companies that use MBO include:

 Hewlett-Packard
 Xerox
 Intel

9
Management as a social process

Management is a social process because management functions are basically concerned with
relations among people. It is called a social process since the efforts of human beings have to be
directed, coordinated and regulated by management.

Here are some examples of management as a social process in the management process:

 Managers must communicate with employees to ensure that everyone is on the same page.
 Managers must work with employees to develop goals and objectives that are aligned with the
company’s mission and vision.

Management is a social process because it involves the control and use of financial resources as well
as human resources to achieve an organization’s targeted goals.

Advantages of management as a social process include:

 Better communication and coordination among employees

 Increased employee motivation and job satisfaction
 Improved decision-making processes

Disadvantages of management as a social process include:

 Time-consuming decision-making processes

 Difficulty in measuring the effectiveness of management processes
 Resistance to change by employees

Many companies use management as a social process. Here are some examples:

 IBM
 General Electric
 Procter & Gamble
 Microsoft
 Apple
 Adobe

10
Business environment

The business environment is the combination of internal and external factors that affect how a
business operates. It may involve social, economic or institutional conditions, such as employees,
customers, stakeholders, other organizations, policies or resources.

In the management process, it is important to study the business environment to determine

potential changes and develop strategies to leverage those developments to improve
operations.Business managers and others in leadership positions can use the business environment
to create and implement new ideas to improve operations. When an unexpected change occurs
within the business environment, teams can use innovation to conform to the changes.The business
environment is a set of external and internal conditions in which a business operates.

The following are illustrative examples of the business environment:

 Economic conditions
 Political conditions
 Social conditions
 Technological conditions
 Legal conditions

The business environment analysis can help businesses identify opportunities and threats in the
market. It can also help businesses develop strategies to leverage those opportunities and mitigate
those threats.

However, environmental analysis suffers from certain limitations such as lack of forewarning of
unforeseen events and does not predict the future.

The business environment can be divided into two parts:

1. Internal environment: This includes factors within the organization such as employees,
management, and organizational culture.

2. External environment: This includes factors outside the organization such as economic
conditions, political conditions, social conditions, technological conditions, legal conditions, and
environmental conditions.

11
Skills and roles of a manager

The management process involves planning, organizing, leading, and controlling resources to
achieve specific goals. The following are some of the skills and roles of a manager in the
management process:

 Planning: A manager must be able to set goals and develop strategies to achieve them.
 Organizing: A manager must be able to organize resources such as people, materials, and
equipment to achieve the goals.
 Leading: A manager must be able to motivate and direct employees to achieve the goals.
 Controlling: A manager must be able to monitor progress and make adjustments as needed.

In addition to these skills, a manager must also have good communication skills, problem-solving
skills, decision-making skills, and interpersonal skills.

Here are some examples of skills and roles of a manager in the management process:

 Leading a team
 Training employees
 Making decisions for their department
 Managing conflicts
 Managing their department’s budget
 Conducting performance reviews
 Hiring new employees

The role of a manager is to oversee the work of employees and ensure that the company’s goals are
met. The skills required for a manager include communication, decision-making, problem-solving,
delegation, and leadership.

Communication skills are essential for a manager to relate well with employees and achieve the
company’s set goals and objectives easily. Decision-making is another vital management skill as
managers make numerous decisions, whether knowingly or not, and making decisions is a key
component in a manager’s role.

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Organization

Organizing is one of the four main managerial functions. It involves arranging resources and tasks in
a way that makes them most effective and efficient.Examples of organization management include
planning in an organization, organizing operations and implementing decisions, leadership and
decision making, control and cooperation.

Organization management helps companies visualize goals and accomplish business objectives. This
process helps companies create clear steps for projects and provides leadership that allows teams to
effectively achieve goals. Here are some benefits a company can experience by employing
organization management strategies:

 Reduces costs
 Optimizes resource allocation
 Promotes adaptability
 Aligns objectives

Organizational management can be used by any company or organization that wants to achieve its
goals and objectives. It helps companies create clear steps for projects and provides leadership that
allows teams to effectively achieve goals.

Organizational management is a strategy companies use to structure their leadership, control their
resources and achieve goals. The company, or organization, is comprised of managers, employees
and resources working toward a common goal. Organizational management describes the planning
and managing of those individuals and resources to achieve goals.
Organizational management has several parts that are essential for the success of any organization.
Here are some of the essential features of organizational management:

 Planning
 Organizing
 Staffing
 Leading
 Control
 Time Management
 Motivation

13
Time and motion study

A time and motion study is a business efficiency technique combining the Time Study work of
Frederick Winslow Taylor with the Motion Study work of Frank and Lillian Gilbreth. It is a major part
of scientific management (Taylorism). After its first introduction, time study developed in the
direction of establishing standard times, while motion study evolved into a technique for improving
work methods. The two techniques became integrated and refined into a widely accepted method
applicable to the improvement and upgrading of work systems.

Here are some examples of time and motion studies in management process:

 A time and motion study was conducted on the process of preparing breakfast at a
restaurant. The study revealed that the process could be improved by rearranging the kitchen
layout.
 A time and motion study was conducted on the process of assembling an automobile
engine. The study revealed that the process could be improved by rearranging the assembly line.
 A time and motion study was conducted on the process of packing boxes in a warehouse. The
study revealed that the process could be improved by rearranging the layout of the warehouse.

There are many benefits associated with the proper conduct and implementation of time and
motion studies. Among other benefits, they:

 Enhance the current methods of performance improvements.

 Help to distinguish the right floor plan or operation layout of the factory.
 Help to identify the best equipment for the job.
 Help to identify the best work methods for the job.
 Help to identify the best sequence of operations for the job.
 Help to identify the best worker for the job.

In conclusion, time and motion studies are an important tool for improving work systems. They help
to identify areas where physical movements are inefficient or wasteful and can be improved by
rearranging the layout of the factory or warehouse. They also help to identify the best equipment,
work methods, sequence of operations, and worker for the job. By enhancing the current methods
of performance improvements, time and motion studies can lead to increased productivity and
efficiency in the workplace.

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Subordination of individuals to the common goals
Subordination of individuals to the common goal in management process is a principle of
management that emphasizes the importance of putting the interests of the organization ahead of
those of individual employees. This principle is based on the idea that when employees work
together towards a common goal, they are more likely to be productive and successful than when
they are working independently.

One example of subordination of individual interest to general interest in management is when an

individual works as a receptionist and smokes tobacco cigarettes. If this affects his service with
regard to irritating clients/customers, the organization will expect the individual to smoke at a time
that will not affect his service provision.

The principle of subordination of individuals to the common goal was introduced by Henri Fayol in
his 14 principles of management. This principle argues that organizational interests should take
precedence over individual interests.

Here are some examples of subordination of individuals to the common goal in management:

1. In a manufacturing company, employees are expected to work together to achieve

production targets. This means that individual employees must be willing to put aside their
personal interests and work towards the common goal of the organization.

2. In a sales team, individual salespeople are expected to work together to achieve sales
targets. This means that they must be willing to share leads and work together to close deals.

3. In a software development team, individual developers are expected to work together to

develop software that meets the needs of the organization. This means that they must be
willing to share code and work together to solve problems.

The principle of subordination of individuals to the common goal is an important principle in

management. It emphasizes the importance of teamwork and collaboration in achieving
organizational goals. By putting aside personal interests and working towards a common goal,
employees can help their organizations achieve success.

15
Hawthorne study

The Hawthorne studies were a series of investigations conducted by Elton Mayo and Fritz
Roethlisberger in the 1920s at the Hawthorne plant of the Western Electric Company. These studies
played a major role in emphasizing the human dimension in an organization during the times when
the evolution of different managements thoughts was taking place.

The studies were conducted to determine how changes in work conditions would affect worker
productivity. The researchers found that worker productivity increased regardless of whether work
conditions were improved or made worse. This led to the conclusion that worker productivity was
influenced by factors other than work conditions, such as social and psychological factors.
The Hawthorne studies consisted of four separate experiments:

1. Illumination Experiments (1924-1927)

2. Relay Assembly Test Room Experiments (1927-1932)
3. Experiments in Interviewing Workers (1928-1930)
4. Bank Wiring Room Experiments (1931-1932)

The Hawthorne effect has been observed in various settings such as healthcare, research, and more.
The Hawthorne studies played a major role in emphasizing the human dimension in an organization
during the times when the evolution of different managements thoughts was taking place. The
studies were conducted to determine how changes in work conditions would affect worker
productivity. The researchers found that worker productivity increased regardless of whether work
conditions were improved or made worse. This led to the conclusion that worker productivity was
influenced by factors other than work conditions, such as social and psychological factors.

The Hawthorne studies changed the way many managers thought about motivation, job productivity,
and employee satisfaction. The result of the experiment was an increase in the worker’s productivity,
both when the light level increased but also when the light was diminished.

The Hawthorne studies were a study of the effects of surveillance on employees and their
productivity. The main conclusion was that employee productivity was increased because more
attention was being paid to the workers. One of the key conclusions of the Hawthorne studies was
the importance of social and psychological factors in the workplace. The studies showed that
workers are not just motivated by wages and working conditions, but also by the social environment
in which they work.

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The systems approach and the contingency approach

The systems approach and the contingency approach are two different approaches to
management. The systems approach is based on the idea that an organization is a system that has
inputs, processes, and outputs. The contingency approach is based on the idea that there is no one
best way to manage an organization. Instead, the best way to manage an organization depends on
the situation.
Here are some examples of the systems approach and the contingency approach in management:

 An example of the systems approach is a company that has a production line. The inputs are
raw materials, the processes are the production line, and the outputs are finished products.
 An example of the contingency approach is a company that has different departments with
different cultures. The best way to manage each department may be different because of the
different cultures.

The systems approach and the contingency approach are useful in the management process because
they provide different ways of thinking about how to manage an organization. The systems approach
helps managers understand how different parts of an organization work together and how changes
in one part of the organization can affect other parts. The contingency approach helps managers
understand that there is no one best way to manage an organization and that the best way to
manage an organization depends on the situation.

Chester Barnard was the first person to utilize the systems approach in the field of management. The
contingency theory of leadership was proposed by the Austrian psychologist Fred Edward Fiedler in
his landmark 1964 article, “A Contingency Model of Leadership Effectiveness”.

The systems approach and the contingency approach are two different ways of thinking about how
to manage an organization. The systems approach helps managers understand how different parts
of an organization work together and how changes in one part of the organization can affect other
parts. The contingency approach helps managers understand that there is no one best way to
manage an organization and that the best way to manage an organization depends on the situation.

17
The Delphi method

The Delphi method is a forecasting technique that involves a group of experts who anonymously
answer a series of questions posed by the researcher. The responses are then aggregated and
analyzed to arrive at a consensus. The Delphi method is used for decision-making processes that
require expert knowledge, such as technology forecasting, strategic planning, and policy-making.

The Delphi method is useful in management processes because it helps to generate group decisions
that genuinely represent the opinions of a panel. It is used to predict the outcome of future
scenarios, the likelihood of an event, or solve an organizational problem. The Delphi method is
particularly useful when there is no clear consensus on the issue at hand and when there is a need
for expert knowledge and judgment.

The Delphi method can be used in various management processes such as:

 Forecasting trends and outcomes in the fields of science and technology.

 Solving high-impact business projects and sensitive political issues.
 Determining the probability of specific events that can occur and analyzing how such events
affect the projects.

The Delphi method is a forecasting process framework based on the results of several rounds of
questionnaires sent to a panel of experts. The experts answer questionnaires in two or more rounds.
After each round, a facilitator provides an anonymous summary of the experts’ forecasts from the
previous round as well as the reasons they provided for their judgments. Thus, experts are
encouraged to revise their earlier answers in light of the replies of other members of their panel. It is
used for decision-making processes that require expert knowledge, judgment and consensus
building such as technology forecasting, business forecasting and policy-making.

Here are some examples of how the Delphi method works in real life:

 The U.S. government wanted to learn how many adolescent pregnancies there were in a certain
town. The government hired a project facilitator to gather the data. It then chose a team of
specialists who were familiar with the city.
 The Delphi method was initially used to forecast trends and outcomes in the fields of science
and technology. For example, it’s been used to predict trends in aerospace, automation,
broadband connections, and the use of technology in schools.

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Types of decision

There are different types of decisions in the management process. Here are some of them:

 Strategic decisions: These are long-term decisions that affect the overall direction of the
organization.
 Tactical decisions: These are short-term decisions that help to implement the strategic decisions.
 Operational decisions: These are day-to-day decisions that help to run the organization
smoothly.
 Programmed decisions: These are routine decisions that follow a set of established rules or
procedures.
 Non-programmed decisions: These are non-routine decisions that require a high degree of
judgment and creativity.

Different types of decisions are used in the management process to help managers make informed
choices that meet organizational goals and objectives. For example, strategic decisions help to set
the overall direction of the organization, while operational decisions help to run the organization
smoothly.

By using different types of decisions, managers can evaluate the pros and cons of various choices
and choose the best option to achieve a desired outcome.

Here are some examples of different types of decisions in management:

 Programmed decisions: These are routine decisions that follow a set of established rules or
procedures. For example, weekly goal-setting.
 Non-programmed decisions: These are non-routine decisions that require a high degree of
judgment and creativity. For example, increasing revenue.
 Strategic decisions: These are long-term decisions that affect the overall direction of the
organization. For example, building a customer base for a new business segment.
 Tactical decisions: These are short-term decisions that help to implement the strategic decisions.
For example, rolling out an ad campaign.
 Operational decisions: These are day-to-day decisions that help to run the organization
smoothly. For example, achieving sales targets.

19
Bounded rationality

Bounded rationality is the idea that rationality is limited when individuals make decisions, and under
these limitations, rational individuals will select a decision that is satisfactory rather than optimal. It
is a concept proposed by Herbert A. Simon, an American political scientist, in his 1957 book “Models
of Man”.

The limitations include the difficulty of the problem requiring a decision, the cognitive capability of
the mind, and the time available to make the decision.

Here are some examples of bounded rationality:

 Decision-making takes place in complex systems in organizations where competing forces exist
and organizational goals don’t align with individual ambitions.
 What’s sensible for an organization in terms of economics gives them the most money.
 Researchers have discovered that handling the barter between price and prestige or what
talents and assets were present was a deep worry for managers.

Bounded rationality is a human decision-making process in which we attempt to satisfied, rather

than optimize. In other words, we seek a decision that will be good enough, rather than the best
possible decision.

In management, bounded rationality is used to explain why individuals make decisions that are not
optimal. It is also used to explain why organizations may not always make the best decisions.

Here are some other concepts related to bounded rationality:

 Satisfying: A decision-making strategy that aims for a satisfactory or adequate solution, rather
than the optimal solution.
 Heuristics: Mental shortcuts that allow individuals to make decisions quickly and efficiently.
 Prospect theory: A theory that describes how individuals make decisions under uncertainty.

20
Political forces decision making

Political forces can have a significant impact on decision-making in management. Political factors can
include power struggles between individuals or groups, the influence of external stakeholders such
as government or regulatory bodies, and the impact of social norms and values on decision-making.

In some cases, political forces can lead to decisions that are not in the best interest of the
organization. It is important for managers to be aware of these political forces and to take them into
account when making decisions.

Political forces can be used by anyone in management who has the power to influence
decisions. This can include political leaders who make decisions that impact businesses, as well as
individuals or groups within an organization who have the power to influence decision-making.
Here are some other factors that can affect decision-making:

 Cognitive biases such as confirmation bias, anchoring bias, and overconfidence.

 Group-think, which occurs when a group of people make decisions without considering all
available information.
 Prospect theory, which suggests that people make decisions based on the potential value of
losses and gains rather than the final outcome.

Here are some real-life examples of political forces affecting decision-making in management:

 Political leaders making decisions that impact labor laws, education, transportation, and taxes,
which can influence business.
 Geopolitical risks such as trade wars, sanctions, and political instability can impact businesses.
 Power struggles between individuals or groups within an organization can lead to decisions that
are not in the best interest of the organization.

In conclusion, political forces can have a significant impact on decision-making in management.

Political factors can include power struggles between individuals or groups, the influence of external
stakeholders such as government or regulatory bodies, and the impact of social norms and values on
decision-making.

It is important for managers to be aware of these political forces and to take them into account
when making decisions. Additionally, it is important for managers to be aware of other factors that
can affect decision-making such as cognitive biases, group-think, and prospect theory.

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Chain of command

The chain of command is a management structure that outlines the authority, decision-making, and
communication within an organization. It is a hierarchical structure that typically has three levels of
management in an organization: top-level management, middle-level management, and lower-level
management. Each level of management plays an essential role in the organization and has a set of
duties and authorities.

The flow of power starts from the top of the organization, that is CEO or President, and goes down
to lower-level managers, supervisors, and employees. The chain of command helps in creating
different levels of management in an organization. It also helps in promoting responsibility, clarity,
and job satisfaction among employees.

The chain of command is a management structure that is used in many organizations. It is a

hierarchical structure that typically has three levels of management in an organization: top-level
management, middle-level management, and lower-level management. Each level of management
plays an essential role in the organization and has a set of duties and authorities.

The perfect example of the chain of command is the military, where decision-making is concentrated
at the top of the organizational structure. In larger companies, the chain of command is often split
into many levels across three distinct tiers: senior management (e.g., CEO, Director, Senior Vice
President), mid-level management (Regional Manager, Department Heads, Supervisor), and regular
employees who don’t manage other employees.

A clear chain of command promotes responsibility, clarity, and job satisfaction among employees. It
helps accomplish goals by bringing different workers with different skills together to produce a
product or service.

In conclusion, the “chain of command” concept is important to organizational structure and

efficiency. It promotes responsibility, clarity, job satisfaction and adds to overall success and
performance.

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Mechanism and organic organizations

In management process, the terms “mechanistic” and “organic” refer to two different types of
organizational structures. Mechanistic organizations are characterized by a high degree of
formalization and standardization. They have well-defined departments with clear hierarchy and
centralized decision making by a few people. On the other hand, organic organizations have a low
degree of formality, specialization and standardization. They have loosely defined departments and
hierarchy and decentralized decision making by many individuals.

Here are some examples of organic and mechanistic organizations:

Organic organizations:

 Google
 W.L. Gore & Associates
 Zappos
 Patagonia

Mechanistic organizations:

 McDonald’s
 Walmart
 Ford Motor Company
 General Electric

The term “mechanistic and organic organizations” was introduced by Tom Burns and G.M. Stalker in
the late 1950s.

The conclusion is that both mechanistic and organic organizations have their advantages and
disadvantages. Mechanistic organizations are more rigid and hierarchical, while organic
organizations are more flexible and adaptable. The choice between the two depends on the
company’s goals, culture, and environment .

23
References

1. Effectiveness and efficiency: Drucker, P. F. (1964).

2. Traditional organization and contemporary organization: Morgan, G. (1997).
3. Virtual organization and boundary less organization: Daft, R. L., & Lengel, R. H. (1986).
4. Mission vision goals and objectives: Kaplan, R. S., & Norton, D. P. (1996).
5. Bureaucracy: Weber, M. (1947).
6. Management by objectives: Drucker, P. F. (1954).
7. Management as a social process: Barnard, C. I. (1938).
8. Business environment: Porter, M. E., & Kramer, M. R. (2011).
9. Skills and roles of a manager: Mintzberg, H., & Gosling, J. (2002).
10. Organization: Mintzberg, H., & McHugh, A. (1985).
11. Time and motion study: Taylor, F.W., & Drury, H.B.(1911).
12. Subordination of individuals to the common goal: Fayol, H.(1916).
13. Hawthorne study: Roethlisberger, F.J., & Dickson,W.J.(1939).
14. The systems approach and the contingency approach: Lawrence,P.R.,& Lorsch,J.W.(1967).
15. The Delphi method: Dalkey,N.C.,& Helmer,O.(1963).
16. Types of decisions: Simon,H.A.(1957).
17. Bounded rationality: Simon,H.A.(1955).
18. Political forces in decision making: Allison,G.T.(1971).
19. Chain of command: Fayol,H.(1916).
20. Mechanistic and organic organizations:Burns,T.& Stalker,G.M.(1961).

24
Annexures

Risks

1. Lack of resources.
2. Poor communication.
3. Scope creep.
4. Inadequate planning.
5. Unrealistic expectations.
6. Inadequate risk management.
7. Inadequate testing

Project schedule

2023/05/02 - Boundary less organizations virtual organizations

2023/05/05 - Goals vs objectives

2023/05/07 - Business environment , Is management art or science ?

2023/05/08 - Firstly enroll for typing my concept book.

2023/06/03 - Effectiveness and efficiency done

2023/06/08 - Traditional & contemporary organization, virtual and boundary less

organization

2023/06/08 - Mission vision goals and objectives.

2023/06/09 - Bureaucracy .Management by objectives, objectives management as a social

process

2023/06/10 - Hawthorne study

2023/06/11 - Organization

2023/06/16 - Time and motion study, Subordination of individuals to the common

goals ,Hawthorne study ,The systems approach and the contingency approach

2023/06/19 - The Delphi method , Types of decisions bounded rationality

2023/06/20 - Political forces in decision making ,Chain of command

2023/06/21 - Mechanistic and organic organizations

2023/06/23 - Search about APA style 6th and 7th editions ( I know APA style in MS word
document only )

2023/06/26 - Typing references. Add content page, Front page edited

25
2023/06/30 - Typing executive summary

2023/07/03 - Search about Annexures

2023/07/03 - Search about Annexures

2023/07/05 - Annexures important point write and type

2023/07/06 - Project timeline making

2023/07/08 - For budget, Think constraint and assumptions

2023/07/10 - Done Annexures

2023/07/12 - Get print to me and done all my self

2023/07/16 - Check one by one before submit

202/07/17 - Ready to submit

26
END……………………………………

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